ALEP: Why Were We Not Offered the Right Of First Refusal?
Leasehold Life is pleased to publish the following article, reproduced with kind permission of the Association of Leasehold Enfranchisement Practitioners (ALEP). ALEP exists to ensure that valuers, solicitors, intermediaries and others involved in leasehold enfranchisement adhere to an agreed level of conduct and service.
The article explains what happens when the freehold is sold but you were not told and you now want to know whether the sale went through fairly.
If you did not receive a Section 5 Notice from your freeholder then they should have followed a very strict process. If it was sold on the open market then you and your neighbours in the block should have received a Section 5A notice, if it was sold in an auction, this would be a Section 5B notice.
If you find out that in fact you did not get this right of first refusal under the Landlord and Tenant Act 1987 (the Act) then you can do something about it. Possibly you have had a ground rent demand but you notice you need to be paying someone different. Or you have received a letter saying that the sale has taken place.
If you know your new landlord and you have only become aware in the last 4 months then you may be able to serve what is known as a Section 11A notice under the Act. This allows you to demand more information about the sale which may confirm for you that the transaction was not legal.
If it turns out that the previous freeholder did not send the appropriate notices according to the prescribed timescales you may be able to take control yourselves of the freehold. Essentially flat owners can force the new owner to sell the freehold to them for the same price the new owner paid, under the exact same terms.
Section 12A, 12B or 12CNotices can be used to force the transfer. But this must be done within 6 months of finding out via the Section 11 or Section 3 notices that the sale of the freehold did not comply with the law. The price cannot be renegotiated, although the First Tier Tibunal (Property Chamber) can be called in if the transaction was not clear cut.
It will need more than half of the qualifying tenants – your flat-owning neighbours – to serve these notices. This is not always an easy threshold to reach and will require some co-ordination. Specialist companies provide such project management services as will some solicitors and surveyors.
This article does not constitute advice, so you should only act after consulting a suitably qualified enfranchisement solicitor. You can find the specialists and intermediaries in Enfranchisement as it is called at the web site of the Association of Leasehold Enfranchisement Practitioners. There is a searchable database so you can find a local professional.
It is a very serious matter for a freeholder to ignore the right of first refusal or to sell the freehold for a lower price than they quoted in a relevant notice. In fact, it is a criminal offence and comes with a fine, albeit with a small maximum of £5,000.